Bloomberg News

Japan’s Bonds Rise as Greece Political Turmoil Boosts Demand

June 16, 2011

June 16 (Bloomberg) -- Japan’s bonds rose, snapping a three-day drop, as concern political turmoil in Greece will delay a second bailout for the debt-stricken nation boosted demand for the relative safety of the Asian country’s debt.

Bond futures rallied from a two-week low after the opposition in Greece told Prime Minister George Papandreou to resign, allies turned against him and police deployed tear gas to break up anti-government protests in Athens. Demand for the securities also increased after Treasuries rallied and Asian stocks extended a global decline in equities.

“Greece can’t repay its debt, and the situation is hopeless,” said Shinji Hiramatsu, senior investment manager in Tokyo at Sompo Japan Nipponkoa Asset Management Co. Ltd., which oversees about $50 billion. “People need to buy bonds today.”

The yield on the 1.2 percent bond due June 2021 fell four basis points to 1.120 percent as of 3:06 p.m. in Tokyo at Japan Bond Trading Co., the nation’s largest interdealer debt broker. That was the lowest level since June 9. A basis point is 0.01 percentage point.

Ten-year bond futures for September delivery rose 0.47 to 141.07 at the 3 p.m. close of the Tokyo Stock Exchange. Ten-year futures reached 140.53 yesterday, the lowest since June 1.

European Central Bank Governing Council member Nout Wellink said the emergency fund for euro-zone countries should be doubled if private investors are pressured to contribute to additional refinancing aid for Greece, Het Financieele Dagblad reported, citing an interview.

Treasury 10-year yields fell 13 basis points to 2.97 percent yesterday. The MSCI Asia Pacific Index of regional shares dropped as much as 2.2 percent today.

--With assistance from Monami Yui in Tokyo. Editors: Jonathan Annells, Naoto Hosoda

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net.

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.


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